Nov 11, 2015 |
By Allison Bell
The eHealth
execs know about the medical and Medicare markets. The HII execs are more
interested in short-term medical and supplemental benefits.
The Medicare product market looks good.
The major
medical looks more challenging, but maybe higher prices will create
opportunities for other health-related products.
Executives from
eHealth Inc. (Nasdaq:EHTH) and Health Insurance Innovations Inc. (Nasdaq:HIIQ)
shared observations supporting those assessments in conference calls with
securities analysts.
For eHealth,
the first company to figure out how to sell substantial amounts of private
health coverage through the Web, the arrival of competition from the Patient
Protection and Affordable Care Act (PPACA) exchange system has been
challenging: The company was not able to help customers sign up for exchange
plan subsidies during the first open enrollment period, and the second open
enrollment period was also challenging.
Now, every
summer, it has to deal with PPACA rules that sharply limit major medical
coverage sales outside the open enrollment period.
The company
reported $3.6 million in net income for the third quarter on $38 million in
revenue, compared with $1.5 million in net income on $41 million in revenue for
the third quarter of 2014.
The number of
individual and family major medical applications fell to 22,500, from 23,800 in
the third quarter of 2014, and the number approved for coverage during the
quarter fell to 23,700, from 28,100.
The company has
been focusing more on the sales of Medicare plans, and the number of customers
with Medicare plan coverage increased to 182,700, from 121,300 a year earlier.
Health
Insurance Innovations, a company that focuses on selling short-term medical
insurance and supplemental insurance products, is reporting $1.5 million in net
income for the quarter on $26 million in revenue, compared with a $612,000 net
loss on $23 million in revenue in the third quarter of 2014.
The total
number of policies in force increased 32 percent year-over-year, to 137,000,
and the number of applications submitted increased 55 percent, year-over-year.
The Medicare
Advantage open enrollment period started Oct. 15 and will run until Dec. 7.
The individual
major medical open enrollment period started Nov. 1 and will run until Jan. 31.
Gary Lauer said
that the individual major medical business the company has is "very
profitable," but that the company is trying to maintain that
profitability, in part by spending less on major medical marketing and customer
service.
"The
growth driver, and where we're moving right now, is Medicare," Lauer said.
"It's a very exciting place for us to be."
Lauer said he
was not sure what to expect out of the public exchange system during the third
open enrollment period in the way of marketing, but he said he was somewhat
surprised to hear that program managers expect to bring in only 1 million
additional enrollees this year.
Commissions on
the major medical business the company still has are higher than they were a
year ago, Lauer said.
At Health
Insurance Innovations, a company that has traditionally sold products through
networks of agents, executives said the birth of the company's
AgileHealthInsurance.com direct sales website has brought in new business, but
that the budget-conscious consumers who use the website tend to spend less than
the consumers who buy coverage through agents.
The company has
also added more of its own brokers.
Patrick
McNamee, the company's chief executive officer, said it's hoping having its own
brokers will reduce some of the competition for broker attention from major
medical coverage that the company faced during the open enrollment period for
2015 coverage.
"For the
first time, we're really playing offensive during open enrollment,"
McNamee said.
The increasing
cost of major medical coverage could also increase interest in the kinds of products
Health Insurance Innovations offers, company executives said.
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